Dawn of a Post‐Venture Era: The New Face of Innovation ......The New Face of Innovation & Translational Research A Quick “Recap” of Biopharma’s Financial Landscape Funding

Dawn of a Post‐Venture Era:The New Face of Innovation &Translational Research

BIO 2017 Annual MeetingJune 2017

Mark G. EdwardsManaging Director

The New Face of Innovation &Translational Research

A Quick “Recap” of Biopharma’s Financial Landscape

Funding Translational Research: The Road Less Traveled

An Early Trailblazer – The Cystic Fibrosis Foundation

Can Research Institutions Thrive in a Post-Venture Era?

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

2013 2014 2015 2016

$5.8 $6.0$5.4

$1.9

$4.6$5.7

$9.4

$8.0

IPO ProceedsVenture Spend

Financing for Biopharma has Been Strong in Recent Years,with $19.1B in IPO Proceeds & $27.6B in Venture Spend

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25

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

2013 IPOs (N=52) 2014 IPOs (N=88) 2015 IPOs (N=65) 2016 IPOs (N=30)

235 Biotechs Went Public in US From 2013‐16, 50% More than over the Previous Decade

Number of IPO Companies by Founding Year

2013 IPOsMedian YearFounded

2016 IPOsMedian YearFounded

Industry Maintains that Public & Private Investmentsin Biopharma are Highly Complementary

Source: Public and Private Sector Contributions to the Research & Development of the Most Transformational Drugs of the Last 25 Years, Tufts Jan 2015

Recent Venture Dollars Went to Late Stage & Start‐up Companies,But Not Much to Companies in the Middle

Source: Biotech’s wellspring – a survey of the health of the private sector in 2016, Nature Biotechnology, May 2017

Late Stage and First Round Companies Received Far MoreFrom Venture than Companies in the Middle Stages


Average Biotech Venture Rounds Have Doubled in Size Over the Past Five Years


Insufficient Funding of Translational Research as been Dubbed “The Valley of Death”

What Work Needs to Be Done to Get Through the Valley?


Over the past three decades, 82% of Biopharma Licenses with Research Institutions have been Early Stage:

Discovery (34%) Lead (18%) Early Preclinical (30%)

Median License Terms have been Generally Static: $80K Upfront $720K Milestones 3.5% Royalty 20-25% of Sublicense Revenue 1 in 10 Licenses with Equity

An Early TrailBlazer: Cystic Fibrosis Foundation Therapeutics

CFFT has Sponsored Five Early Stage CF Projects: Vertex (2000) $17.4M + $5.5M milestones – 6% royalty SGX (2001) $17.1M + $6M milestones – 3% royalty Altus (2001) $25M – $100M less value of warrant rec’d Epix (2005) $29.7M + $7M milestones – 6 to 10% Epirus (2006) $13.8M + $5M milestones – 6.5 to 10.5%

CFFT also Funded Three Early Stage CF Human Clinicals: Inspire (2002) $2M – 6x funds + $4M sales milestone AmpliPhi (2003) $1.7M – 4.5x funds + $4M sales Harbor (2003) $1.7M – 6x funds + $4M sales milestone

Funding Translational Research: Novel Approaches & New Players

Case Study – Aeglea BioTherapeutics / CPRIT (6/15) $19.8M to fund FIH trials for AA depletion drug Repay funding to 4x cap; 0.5% above cap 3% to $500M, 4% to $1B, 5% > $1B cum rev

Other Sources of Funding: Alliance Revenues – Direct & Downstream Royalty Monetization SBIR/STIR CIRM, Wellcome Trust, Parker, BioHub Venture Philanthropy: Program Related Investments (PRIs) Demand Dividend

Research Institutions Have Benefited fromRecent Increases in Disclosed Upstream License Terms

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$10.0

$15.0

$20.0

$25.0

2013 2014 2015 2016

$2.7 $3.7

$16.4

$22.2

$0.2 $0.1 $0.6 $0.8

Median SizeMedian Upfront

N=35 N=44 N=48 N=38of 101 of 232 of 335 of 223

There are 240 University Licenses with Members of the Biotech IPO Class of 2013‐16, & 20% have Equity

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30

# of Dea

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Licenses w/ Equity

Research Institutions Should Benefit Substantially fromRecent Increases in IPO Class of 2013‐16 Commercialization Alliances

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$20.0

$40.0

$60.0

$80.0

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$120.0

$140.0

$160.0

2013 2014 2015 2016

$78.2

$118.9$101.8

$147.0

$5.5 $7.4 $10.0 $11.0

Median SizeMedian Upfront

N=48 N=60 N=61 N=54of 90 of 130 of 133 of 121

Royalty Monetization:A Potential Source of Translational Research Funding

$7.1 Billion has been raised via Royalty Monetization:

CFFT/Vertex (Kalydeco) -- $3.7 Billion (6% royalty) UCLA/Medivation (Xtandi) -- $1.1 Billion (4% royalty) Northwestern/Pfizer (Lyrica) -- $990M (6% royalty) NYU/Centocor (Remicade) -- $650M (6% royalty) CHOP/Merck (RotaTeq) -- $182M Dana Farber/Multiple (PD-L1) -- $168M MRC/Merck (Keytruda) -- $150M Children’s Boston/Celgene (Revlimid) -- $132M (1%) Penn/Aegerion (Juxtapid) -- $55M (5-8% royalty)

Who Will Fill the Translational Research Funding Gap?

Documents

Dawn of a Post‐Venture Era: The New Face of Innovation ......The New Face of Innovation & Translational Research A Quick “Recap” of Biopharma’s Financial Landscape Funding